California LLC and the $800 Minimum Franchise Tax
Published 3 September 2026 · Reviewed by Ashfaq Khattak, US Tax Consultant
California charges every LLC organised there or registered to do business there a minimum $800 annual franchise tax, regardless of profit, revenue or activity. A dormant California LLC that never opened a bank account owes $800 a year. For a non-resident with no reason to be in California, that is the most expensive formation decision available in the United States.
Read this page before you form in California, and read it too if you formed in Wyoming and sell to Californians — because California’s definition of "doing business" is broad enough to reach an out-of-state LLC, and registering late does not avoid the years in between.
The $800, precisely
The annual minimum franchise tax applies to an LLC that is organised under California law or registered to do business in California. It is owed:
- whether or not the company made a profit;
- whether or not it had any revenue;
- whether or not any member lives in California;
- whether or not it did anything at all that year.
On top of the minimum, California charges an additional LLC fee scaled to total income once the company passes certain thresholds, and requires Form 568. So the $800 is a floor, not a ceiling.
The Franchise Tax Board publishes the current amounts and the Form 568 requirement. We checked this on 3 September 2026; confirm it there before you act on it.
How a Wyoming LLC ends up owing California money
This is the part that surprises people, and it is the reason this page exists. California can treat an out-of-state LLC as doing business in California — and therefore require registration and the $800 — on the strength of connections a founder would not think twice about:
- A member, employee or contractor physically working in California.
- A sales representative travelling into the state.
- Sales to California customers above a dollar threshold that the FTB indexes and publishes.
- Property or inventory held in California, including stock in a fulfilment warehouse.
That last one matters for e-commerce sellers: inventory in a Californian fulfilment centre is a physical presence in California, whoever operates the warehouse. Forming in Wyoming does not undo it.
Registering years late does not reset the clock. The tax accrues for the years you were doing business unregistered, with penalties and interest, and it is the kind of liability that surfaces when you try to sell the company or open a bank account.
When California is unavoidable, and what to do then
If you genuinely operate in California — staff there, an office, inventory in the state — you are not choosing California, you already have it. The choice is only whether you comply or accumulate a liability. In that case:
- Register properly, as a California LLC or as a foreign LLC registered in California.
- Budget the $800 as a fixed annual cost, like rent. It is not a tax on success; it is a tax on existing.
- File Form 568 each year, and the additional fee if your income crosses a threshold.
- Get advice on the gross-receipts fee if you are growing, because it steps up and the steps are large.
And if you are not operating in California: form in Wyoming or New Mexico, keep no property or people in the state, and watch where your fulfilment inventory is stored.
Straight comparison
| California | Wyoming | |
|---|---|---|
| Minimum annual state cost | $800, profit or no profit | A low flat annual report minimum |
| Extra fee on income | Yes, stepped by total income | None |
| Annual return | Form 568 | None at state level |
| Members in the public record | Managers/members disclosed | No |
| Reaches out-of-state companies | Yes, aggressively | Not applicable |
What we do
- Work out whether California already has you, before we file anything anywhere. This is the conversation that saves the money.
- Form in the right state — which for most non-residents is not California.
- Register in California where you genuinely operate there, with the $800 and Form 568 in the plan from the start rather than discovered in year three.
- Federal work as usual: EIN, BOI report, Form 5472 where it applies.
What your state choice does not change
These are federal and they follow the company wherever it is formed:
- Your EIN. Every LLC needs one to open a bank account, and with no SSN it is a fax or mail application to the IRS rather than the instant online one.
- Form 5472. A foreign-owned single-member LLC files it with a pro-forma Form 1120 every year, at a penalty of $25,000 for missing it, whether or not the company earned anything.
- Your BOI report. Filed with FinCEN, not with the state. Choosing an anonymous state does not make you anonymous to the federal government.
Anyone selling you a state on the basis that it removes one of these is selling you a $25,000 problem.
Frequently asked questions
Do I have to pay California’s $800 tax if my LLC made no money?
Yes. The minimum annual franchise tax applies to every LLC organised under California law or registered to do business in California, regardless of profit, revenue, activity, or whether any member lives in California. A dormant California LLC that never opened a bank account still owes it.
Can California charge my Wyoming LLC?
It can, if the Wyoming LLC is doing business in California. That can be triggered by a member, employee or contractor working in California, by sales into the state above a published threshold, or by holding inventory in a Californian warehouse — including an Amazon fulfilment centre.
What happens if I registered in California years late?
Registering late does not reset the clock. The tax accrues for the years you were doing business unregistered, with penalties and interest, and the liability typically surfaces when you try to sell the company or open a bank account.
Should a non-resident ever form in California?
Only if you genuinely operate there — staff, an office or inventory in the state. In that case you have California already and the choice is whether to comply or to accumulate a liability.
Official sources
Rules, forms and fees on this page come from the following official sources, each checked on 2026-09-03. Government fees and deadlines change; confirm the current figure on the agency's own page before you file.